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GM spending on EVs set to outstrip outlays on gas, diesel technologies


Kalea Hall Breana Noble   | The Detroit News

Detroit — General Motors Co. on Thursday signaled a historic shift to the all-electric future it envisions, detailing plans to invest more on next-generation technology over the next five years than on the gas and diesel powertrains that drive its profitability. 

The Detroit automaker will spend $27 billion through 2025 on autonomous and electric vehicle technology, up from the $20 billion it previously confirmed. That means more than half of GM’s capital spending and product development team will be focused on electric and autonomous vehicle programs — which now represent just a tiny fraction of the vast U.S. market.

The strategic by GM move comes as President-elect Joe Biden begins to form an administration that says it would rejoin the Paris Climate Accords abandoned by the Trump administration. Team Biden says it's bullish on the potential of electric vehicles, their ability to create new American manufacturing jobs, and their ability to lower vehicle emissions. 

A leading maker of traditional pickups and SUVs, GM will offer 30 all-electric models globally by mid-decade, and it plans to make 40% of its U.S. entries battery-electric vehicles by the end of 2025. It's also accelerating its timeline for delivering several electric vehicles, telling its competition and Wall Street that it means business about the future and it's willing to bet on it. 

"It's not just a historical point for General Motors, it's historical for the auto industry and for that matter the world," said Larry Burns, an adviser to autonomous-vehicle start-ups and GM's former vice president of research and development. GM has reached the "tipping point" where "now that they have confidence in these technologies, they are pivoting ... to a different future." 

GM plans to reach its goals by lowering two barriers to consumer adoption: range and cost. It projects its Ultium-based electric vehicles will get up to 450 miles of range, up from the 400 initially projected. GM claims its new battery packs by mid-decade will cost 60% less and will have twice the energy storage, decreasing the cost of the vehicle overall and increasing range capability. It plans to offer electric vehicles at all price points, though it has started out with luxury-level pricing.

"We are leveraging our iconic brands, technological innovations, design, engineering and manufacturing expertise, and our scale in a way that is changing how customers and investors view our company," GM CEO Mary Barra said at the Barclays Global Automotive Summit. "This is how we will win." 

The automaker also is quickening the timeline on its GMC Hummer EV and Cadillac Lyriq programs, along with other vehicles to be revealed later. The development schedules for 12 vehicle programs have been fast-tracked, including: Three other GMC Ultium variants, including an EV pickup; four Chevrolet EVs, including a pickup and compact crossover; and four Cadillacs. Additionally, Buick’s EV lineup will include two Ultium-based EVs.

The 2022 Hummer development time of 26 months is down from about 50 months, now the GM benchmark. The Hummer will launch in late 2021. After the Hummer EV, the next electric launch will be the Lyriq, Cadillac’s first all-electric vehicle, which will arrive in the first quarter of 2022, nine months ahead of schedule.

GM previously planned to spend $7 billion a year in capital investments, but executives say it will now exceed that through at least 2023 as it increases electric vehicle investments.

“It’s been more than three years since they originally made their announcement that they would have 20 EVs by 2023," said Sam Abuesalmid, e-mobility analyst at Guidehose Insights. "None of those vehicles have come to market yet. Now, it’s time for them to execute on the plan, bringing these vehicles to market and proving people will buy them."

Electric vehicles have accounted for just 1.5% of total U.S. sales in 2020, according to auto research website Edmunds.com Inc. The selection thus far is limited, but vehicles in more desirable pickup and crossover segments are coming over the next 24 months.

"Long-term, the market is going to go toward electric," said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions LLC. "The customer has to catch up. And right now, the customer sees an electric vehicle as the replacement for the next vehicle, and not necessarily their next vehicle. Unless your neighbor can afford an $80,000 Tesla, you probably don't have an electric vehicle yet."

Still, Barra's message sends a signal that GM is moving in this electric direction and private and public funds should facilitate the way.

"Mary Barra’s job is to make the company move smoothly and make the investors happy," Fiorani said. "GM’s job is not in infrastructure. It is making product people will buy, which is internal combustion engine cars and trucks and more trucks. But GM is planning to be ready when the customer is there, and it’s Mary Barra’s job to make sure the company is ready for the future."

Thursday's move comes after GM completed an aggressive push of electric-vehicle news over the last few months, and after the country voted to make Joe Biden the next president of the United States. The Democrat president-elect is expected to be more proactive toward an all-electric future, saying that he wants to see 500,000 charging stations installed to support the industry's transition. 

"They were going to develop this technology and move in this direction no matter what, but now it reflects the changing political climate in the country," said Karl Brauer, an executive analyst at iSeeCars.com. "That's a key part of this. We are going to hear more and more about efforts to reduce CO2 and be more integrated partners in the global efforts to fight climate change. Now, General Motors will be positioned to fall right in line with that thinking and that movement."

This month, GM said it would hire 3,000 new staffers for engineering, design and IT jobs to help push forward as a leading electric vehicle maker. GM and LG Chem are also hiring for their Ultium Cells LLC joint venture, which will mass-produce Ultium battery cells for electric vehicles and create more than 1,100 jobs in a northeast Ohio plant expected to go online in early 2022.

In October, the automaker unveiled the $112,595 Hummer EV. It also announced a $2 billion investment at its Spring Hill, Tennessee, plant to build both electric and gas-powered vehicles at the same time, including the new electric Cadillac Lyriq crossover. Spring Hill is the third manufacturing facility GM allocated for electric vehicle production.

GM's electric vehicles will be powered by its new Ultium battery platform, a technology it also is marketing to others. Japanese rival Honda Motor Co. already plans to use the technology. And GM still is negotiating a deal with Nikola Corp. to build electric and hydrogen fuel-cell vehicles together. Barra said the company is still working on licensing the technology for other companies to use, though she wouldn't provide any specifics on future deals. 

"We do think there's the opportunity to leverage beyond not only the auto industry but other industries," she said, "so we are open to do that." 

GM says its Ultium batteries are unique to the industry because the large-format, pouch-style cells can be stacked vertically or horizontally inside the battery pack, allowing designers to optimize battery storage and layout for each vehicle's design. The Ultium battery's energy options range from 50-200 kWh, which GM estimates will provide a range of more than 400 miles on a full charge and accelerate from 0 to 60 mph in as little as 3 seconds.

GM plans to power its future electric with five drive units and three motors known as Ultium Drive. Components for Ultium Drive will be built with globally sourced parts at GM’s existing global propulsion facilities. It touts the Ultium platform is flexible enough to accept new chemistry and cell types without redesigns to its architecture. 

GM plans to construct an all-new Battery Innovation Lab and Manufacturing Technology Center to develop the next-generation Ultium battery chemistry next year.

The transition to electric also is raising concerns the shift to electric powertrains with fewer parts and longer life cycles could reduce traditional manufacturing jobs.

The United Auto Workers on Thursday "commended" GM for its investment, but Vice President Terry Dittes, director of the UAW's GM Department, wrote: "The role in the union will be to ensure these investments in electric vehicles will continue right here in the USA and provide jobs right here in ... America. The UAW will continue to push this issue vigorously as GM invests in future EV vehicles."

khall@detroitnews.com

Twitter: @bykaleahall